1) Your firm has total sales of $1,700. Operating Costs are $745, excluding depr
ID: 2758511 • Letter: 1
Question
1) Your firm has total sales of $1,700. Operating Costs are $745, excluding depreciation and taxes, and operating related depreciation is $155. The tax rate is 20%. What is the operating cash flow? A. $460 B. $600 C. $640 D. $800 E. $955 2) Alaska Autos has beginning net fixed assets of $480 and ending net fixed assets of $450. Assets valued at $120 were sold during the year. Depreciation to-date on the unsold assets was $40. What is the amount spent on new assets? A. $10 B. $30 C. $50 D. $90 E. $130 3) At the beginning of the year, a firm has current assets of $900 and current liabilities of $500. At the end of the year, the current assets are $950 and the current liabilities are $600. What is the change in net working capital? A. -$100 B. -$50 C. $0 D. $50 E. $100Explanation / Answer
Answer 1 Calculation of operating cash flow In $ Sales 1700 Less : Expenses - Operating cost 745 - Depreciation 155 Net Operating Income before tax 800 Less : Tax @ 20% 160 Net Operating Income after tax 640 (+) Depreciation 155 Operating Cash Flow 795 The answer is option D i.e.$800 Answer 2 In $ Ending Net Fixed asset 450 (+) Accumulated depreciation 40 Book value of Ending Fixed asset 490 (+) Asset sold during the year 120 Total Book value of fixed asset before sale 610 (-) Beginning net fixed assets 480 Amount spent on new asset 130 The answer is option E i.e.$130 Answer 3 Working capital at the beginning of the year In $ Current assets 900 (-) Current Liabilities 500 Net Working Capital at the beginning of the year 400 Working capital at the end of the year In $ Current assets 950 (-) Current Liabilities 600 Net Working Capital at the end of the year 350 Change in Net working capital = $350 - $400 = -$50 The answer is option B i.e -$50
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